It’s a simple fact of this business: location is key for every real estate investment. In the Colorado real estate market, one of the top locations is the Denver real estate market. Not only is Denver a top-tier market within the state, but it is also among the best in the nation in 2019. What are the most influential trends in the Denver rental market? What are the best Denver neighborhoods that investors should consider? Read more to find out!
Related: Colorado Housing Market 2019: Why and Where to Invest
The Top 5 Trends of the Denver Rental Market
1. Relative Affordability
Affordability is a vital trend that, unfortunately, many US markets do not possess. Typically, markets with property prices that are lower than the national median, which is most recently at approximately $310,000, are considered affordable.
The Denver real estate market has a median property price of $447,439 (according to Mashvisor). While this is higher than the national median, it is considered affordable relative to the State of Colorado. The state’s median property price is $542,275, which is well above the median price of Denver investment properties.
The Denver rental market also has a lower price-to-rent ratio than the Colorado real estate market: 19 vs. 23 respectively.
2. Real Estate Appreciation
The Denver rental market is ripe with rental income for long-term rentals, as is exemplified in the list of the best Denver neighborhoods at the end of this post. The rental market in Denver is also successful with real estate appreciation, or an increase in property value over time. According to NeighborhoodScout, properties in the Denver real estate market appreciated by over 92 percent over the last ten years. As you would expect, this places the Denver housing market in the top 10 percent in the US for appreciation.
During the last 12 months, the properties in Denver appreciated by 4.91 percent. While this is an impressively high appreciation rate, it is a decrease from the previous 12 months. This decrease in appreciation rate is a trend that is expected to continue in the Denver housing market. So it is best that real estate investors buy and hold Denver properties. In this way, they can benefit from cash flow rather than banking on appreciation.
3. Buyer’s Market and Rental Property Demand
As previously mentioned, appreciation has started to slow down in the Denver market. The expected 2019 appreciation rate, for instance, of the Denver rental market is -0.8 percent according to Zillow. This trend has partially led to another trend – the cooling of Denver’s market. The city’s shift to a buyer’s market is one of the reasons why Denver rental properties are in demand, but there are many others. Half of the city’s residents live in a Denver rental property.
Related: Should I Buy Investment Property in a Buyer’s or Seller’s Market?
Denver also ranks admirably in many factors, further strengthening demand for real estate in the city. These include the fact that Denver is the 11th best city for young professionals, the 24th healthiest city in the US, and the 61st best city to live in. Denver is also one of the best cities to retire and raise a family in.
4. Population Growth
Demand is also strong for Denver residential real estate due to population growth. Denver is one of the few cities with a 2019 population growth rate that is projected to be above the national rate, according to a report by the PwC. Over the last year, Denver’s population grew by over 11,000, which was one of the highest population increases in the US. Not only is population growth an important trend in the current year, but it will remain this way for the Denver rental market forecast 2020.
5. Growing Economy
The city’s economy is another reason why Denver real estate investors who buy rental property will enjoy high demand for their properties. Denver’s unemployment rate is 3.0%. This is lower than the US average of 3.9%. During the last 12 months, Denver’s job market has increased by 2.8 percent. This increase is expected to continue for years to come. Denver’s future job growth over the next decade is projected to be 45 percent, which is well above the US average of 33.5 percent. Denver’s economy is arguably the main reason why its rental occupancy rates are high.
The Top 5 Neighborhoods in the Denver Rental Market
The current real estate market trends in Denver are positive and encouraging for any investor. But where exactly should you invest? What are the best neighborhoods in the Denver rental market? Also, what is the average rent in Denver, in each of these neighborhoods?
To answer the first question, the best neighborhoods in Denver, according to Mashvisor, are Baker, North Capitol Hill, Montbello, Fort Logan, and Stapleton. We’ve also included our real estate data to answer all your other questions:
1. Baker
Pricing
- Median Property Price: $202,933
- Price per Square Foot: $137
- Price-to-Rent Ratio: 8
Traditional Investing
- Rental Income: $2,068
- Cap Rate / Cash on Cash Return: 6.2%
2. North Capitol Hill
Pricing
- Median Property Price: $543,300
- Price per Square Foot: $354
- Price-to-Rent Ratio: 11
Traditional Investing
- Rental Income: $4,179
- Cap Rate / Cash on Cash Return: 5.7%
3. Montbello
Pricing
- Median Property Price: $271,732
- Price per Square Foot: $202
- Price-to-Rent Ratio: 11
Traditional Investing
- Rental Income: $2,074
- Cap Rate / Cash on Cash Return: 4.4%
4. Fort Logan
Pricing
- Median Property Price: $160,000
- Price per Square Foot: $193
- Price-to-Rent Ratio: 10
Traditional Investing
- Rental Income: $1,380
- Cap Rate / Cash on Cash Return: 4.4%
5. Stapleton
Pricing
- Median Property Price: $466,988
- Price per Square Foot: $189
- Price-to-Rent Ratio: 15
Traditional Investing
- Rental Income: $2,588
- Cap Rate / Cash on Cash Return: 3.2%
Try out Mashvisor’s Property Finder for free to find a top-performing Denver investment property now.
Conclusion
All in all, the Denver rental market is among the best of the best in the US real estate market in 2019. Whether rental property owners are interested in single-family or apartment rentals, Denver has it all. With an excellent combination of relative affordability, rental income, appreciation, demand, population growth, and economic success, Denver is ahead of the pack when it comes to traditional long-term rentals.
To start searching for Denver houses for sale, click here to start your 14-day FREE trial with Mashvisor today!
Related: Expert’s Guide on Finding Income Properties Using a Heatmap
